Judicial Watch • Barney Frank’s Ethics Mess

Barney Frank’s Ethics Mess

Barney Frank’s Ethics Mess

APRIL 02, 2010

April 2, 2010

From the Desk of Judicial Watch President Tom Fitton:

Explosive Treasury Emails Put Barney Frank in the Ethics Hot Seat

When Barney Frank was asked about intervening on behalf of a home state bank for Troubled Assets Relief Program (TARP) funds, the Massachusetts Democrat admitted he spoke to a “federal regulator” but according to the Wall Street Journal, “he didn’t remember which federal regulator he spoke with.”

According to explosive new Treasury Department emails uncovered by Judicial Watch, it appears this nameless bureaucrat is none other than then-Treasury Secretary Henry “Hank” Paulson!

These documents, which we obtained in response to a Freedom of Information Act (FOIA) lawsuit, indicate that Frank personally called former Secretary Paulson regarding a TARP cash infusion for the Boston-based OneUnited Bank. And it worked. On November 25, 2008, following Frank’s intervention, the Treasury Department awarded $12,063,000 in bailout funds to OneUnited, which is located in Frank’s district.

Moreover, according to these documents, Frank is not the only Democratic Congressman with dirty hands in the OneUnited bank scandal. Rep. Maxine Waters (D-CA), whose husband, Sidney Williams, served on the OneUnited Board of Directors, also intervened on behalf of the Massachusetts Bank. (Williams resigned shortly after Waters approached federal regulators regarding the OneUnited TARP grant.)

Among the key documents is an October 17, 2008, email from former Deputy Assistant Secretary for Banking and Finance King Mueller to former Assistant Treasury Secretary Neel Kashkari and other Treasury officials referencing the contact between Frank and Paulson:

Just spoke w/ Jim [Segel] in BF’s [Barney Frank’s] office. This is about One United Bank (a minority owned bank in BF’s district). Maxine Waters is interested in the bank as well, Treas[ury] and others met w/ them (minority bankers assoc) last month per the Water’s request. They were a big holder in f/f preferred. BF is interested and may call HMP [Henry Paulson] again about this. FDIC is their primary federal regulator. [Emphasis added.]

And there is also this October 16, 2008, email from Kashkari to former Deputy Assistant Secretary for Appropriations and Management Peter Dugas: “Peter, Jim Siegel [sic] from Frank’s office called a few times-can one of you follow-up with him?” (Segel serves as Frank’s Chief Counsel.) Paulson’s October 2008 calendar, which has been released separately, details calls from Frank on October 2, 3, 7, 9, 13, and 17.

With respect to Rep. Waters, the documents include a January 13, 2009, email from Brookly McLaughlin, Treasury’s Deputy Assistant Secretary for Public Affairs, expressing surprise at Waters’ apparent conflict of interest: “Further to email below, WSJ [Wall Street Journal] tells me: …Apparently this bank is the only one that has gotten money through section 103-6 of the EESA law. And Maxine Waters’ husband is on the board of the bank. ??????”

The fact that Frank and Waters improperly intervened to score some TARP cash for OneUnited does not shock me. This is exactly the kind of corrupt deal-making I expected when the federal government decided to throw massive amounts of taxpayer dollars at private institutions. But I have to say, it is a rare case indeed when the documented evidence of impropriety is so clear.

These documents indicate that Barney Frank has been flagrantly dishonest about his role in lobbying for OneUnited. I mean, who is Frank kidding trying to suggest he didn’t remember calling Hank Paulson? It’s early but this looks to me like it could mushroom into another Keating Five-type scandal. And it certainly calls into question whether Rep. Frank should remain head of the powerful House Financial Services Committee.

No wonder the Obama Treasury Department stonewalled the release of these documents.

As I’ve mentioned previously, without the intervention of Frank and Waters, OneUnited would seem an unlikely recipient of TARP funds. As reported in the January 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide funds to healthy banks in order to jump-start lending. Not only was OneUnited Bank in massive financial turmoil, but it was also “under attack from its regulators for allegations of poor lending practices and executive pay abuses, including owning a Porsche for its executives’ use.” The bank continues to flounder and is one of the few financial institutions to have not paid dividends to the federal government in exchange for the TARP cash infusion.

The good news is that the media is beginning to cover this scandal. The Fox Business Channel highlighted our work just last night. To view the segment, go to our YouTube channel here.

Judicial Watch Fights Back Against Double Dipping Judges

Is it me or are we experiencing a sharp increase in incidents involving public officials double dipping on the taxpayer’s dime?

Of course you already know about Judicial Watch’s taxpayer lawsuit against the Chief of Police of Phoenix, who’s receiving illegal pension benefits valued at $90,000 per year. Judicial Watch recently exposed on its blog a double dipping policy in New York State that allows lawmakers to simultaneously collect their lucrative government salary and pension for the same job without even telling constituents. There is also the double dipping scandal in Alabama where state lawmakers were holding taxpayer-funded university jobs and engaging in all sorts of abusive and wasteful practices.

But perhaps the most flagrant case of abuse is highlighted in Judicial Watch’s long-standing legal campaign against double dipping judges in Los Angeles County. Now, as you may recall, this is a court battle we had already won. That is until the California State Legislature instituted a legislative “fix” to get around the court’s mandate and continue the double dipping policy. But we’re now back in court yet again. Just this week we filed our opening brief with the California Court of Appeals to put an end to this unlawful policy.

It has been a while since I’ve covered this lawsuit, so let me quickly walk you through how we got to this point.

In 2006, our taxpayer client, Harold Sturgeon, filed a lawsuit against Los Angeles County for allowing individual Los Angeles County judges to amass more than $35,000 annually in cash allowances from the county to pay for benefits and perks they are already receiving from the state. The California Superior Court essentially dismissed the case, ruling in favor of Los Angeles County. But Judicial Watch filed an appeal and emerged victorious, albeit temporarily. In February 2009, California Governor Schwarzenegger called the California State Legislature into a special session for an unrelated series of issues. However, the legislature unlawfully used the opportunity to institute its “fix,” in direct violation of the appellate court order. (The legislation is known as Senate Bill X2 11.) Incredibly, the Los Angeles County judges hired a high-price lobbying firm to lobby for this illicit legislative maneuver.

And here we are.

First off, the California Legislature lacked the authority to enact Senate Bill X2 11 in the first place. According to the California State Constitution, when the Governor calls the legislature into special session, “it has the power to legislate only on subjects specified in the proclamation.” Governor Schwarzenegger’s proclamation convened the legislature to consider three basic issues: legislation to address the economy, legislation to address the mortgage crisis, and legislation to address the solvency of the Unemployment Insurance Fund. You’ll note that judicial compensation is not on the list.

(Here we have a legislature and chief executive legislating in areas barred by a constitution. Remind you of anything else?)

Second, the legislature ignored clear mandates by the appellate court. For example, in its previous ruling the court stated, “…we must be sensitive to the potential that judges might be subject to substantial variations in compensation determined solely by local authorities.” It instructed the legislature to enact a singular “fundamental policy choice.”

Instead, the legislature established judicial compensation system that created a different outcome for each of California’s 58 counties. For example, state court trial judges in Los Angeles County receive $46,000 per year in supplemental compensation, while state court trial judges in Santa Barbara County receive none. In other words, as we put it in our brief, Senate Bill X2 11 “legalizes judicial compensation chaos.”

Finally, we also advance the argument that this convoluted and chaotic compensation system violates the Equal Protection Clause of the Constitution by providing advantages to judges based upon which county bench they happen to serve.

Indeed, the Judicial Council of California looked at the issue of judicial compensation as a result of Judicial Watch’s lawsuit. The Judicial Council is the policymaking body of the California courts, the largest court system in the nation. The Council’s December 2009 report stated that some judges in California receive no extra compensation while those in Los Angeles receive $50,000 extra a year on top of their salaries. The Council report concluded:

The inconsistencies and deficiencies in the benefits packages offered to judges in the State of California have an impact on the state’s ability to continue to attract and retain high-quality judges, who are necessary to maintain a fair and impartial judicial branch.

It is patently offensive the lengths to which these judges have gone to steal from California taxpayers in violation of California State law and a court order (to the tune of $21 million per year). And, as the Judicial Council noted, it impacts the entire judicial branch of California. I hope the appellate court sees through the California Legislature’s shenanigans and puts a stop to this abusive compensation scheme once and for all.

Judicial Watch Warns Senate about Obama Judicial Nominee

I think you’ll agree the last thing we need now is more activist judges willing to scrap the U.S. Constitution in favor of their own liberal agendas and personal whims. Unfortunately that’s exactly what we’re likely to get from President Obama with the nomination of Berkeley professor Goodwin Liu for United States Circuit Judge in the Ninth Circuit.

On March 24, I sent a letter to Senators Leahy and Sessions of the Judiciary Committee to request that they cast a critical eye on this nomination, which seems to me to be potentially disastrous. The letter was pretty clear and concise, so I’m publishing the main points below:

We have grave concerns about the pending nomination of Goodwin Liu to be United States Circuit Judge for the Ninth Circuit.

In a book he co-authored, Keeping Faith with the Constitution, Mr. Liu suggests that the Constitution should be interpreted using the “evolving norms and traditions of our society.” This activist theory for interpreting the Constitution would substitute the whims of individual judges over the text and original meaning of the U.S. Constitution. A copy of this book is available here.

Mr. Liu joined an amicus brief that suggests that the Constitution’s equal protection clause requires allowing same-sex couples to marry… Mr. Liu has a radical and expansive view of judicially-enforceable rights to “welfare,” and seems to oppose the notion that the Constitution is colorblind.

Also of concern is Mr. Liu’s lack of practical legal experience. Mr. Liu has practiced law for just a little over ten years. Judicial nominees ought to have significant practical experience as a lawyer or a judge, especially nominees for appellate seats.

Judicial Watch requests that the Committee thoroughly examine Mr. Liu’s record and judicial philosophy. The rule of law is harmed when activist judges substitute their own will for the plain text and meaning of the U.S. Constitution. The Committee should be prepared to oppose his nomination if such an examination confirms that he embraces an activist judicial philosophy.

Let me be clear, Goodwin Liu has the most radical views of any federal judicial nominee in recent memory. As former chairman of the far-left American Constitution Society he is in no small measure a leader of the opposition for those of us who don’t want judicial activists on the bench. I can understand, considering his own background, why Obama would want to appoint an inexperienced liberal to the courts, but the Senate needs to do its job and probe Liu’s views and qualifications. Many think he’s being groomed for a Supreme Court appointment.

By the way, our effort to educate the Judiciary Committee on the Liu nomination recently earned the attention of Fox News Channel. Check it out on Judicial Watch’s YouTube channel here.

Before I close on this Good Friday, please accept my best wishes on behalf of all of us here at Judicial Watch for a joyous Easter.

Until next week…



Tom Fitton
President


Judicial Watch is a non-partisan, educational foundation organized under Section 501(c)(3) of the Internal Revenue code. Judicial Watch is dedicated to fighting government and judicial corruption and promoting a return to ethics and morality in our nation’s public life. To make a tax-deductible contribution in support of our efforts, click here.

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